Problem 984

A Hepplewhite sofa costs 1940 in cash. Jaquanna Wilson will purchase the sofa in 36 monthly installment payment. A 13% per year finance charge will be assessed on the amount financed. Find the finance charge, the installment price, and the monthly payment.




To obtain the finance charge, first find the number of years Jaquanna Wilson will pay for the sofa. Divide the number of monthly payments by 12.

\frac{36}{12} = 3

The down payment is 0. Therefore, the amount financed is equal to the cash price.

To find the finance charge, multiply the amount financed by the annual finance charge in percent times the number of years to pay off the amount.

Finance charge = 1940*13%*3


To find the installment price, add the finance charge to the cash price.

Installment price = cash price + finance charge

= 1940 + 756.60

= 2696.60

To obtain the monthly payment, divide the installment price by the number of monthly payments.

Monthly payment = \frac{installment-price}{number-of-payments}

= \frac{2696.60}{36}

\approx 74.91

Thus,  the finance charge is 756.60, the installment price is 2696.60 and the monthly payment is 74.91


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